Farmer sentiment improves slightly

The Purdue University-CME Group Ag Economy Barometer increased modestly in February, posting a reading of 111. That was 5 points more than a month earlier. The modest increase in the barometer was attributable to producers expressing somewhat more optimism about the future. The Future Expectations Index increased 7 points to a reading of 115 while the Current Conditions Index was unchanged, both compared to a month earlier.

Although farmer expectations for the future improved in February, their financial-performance expectations did not. February’s Farm Financial Performance Index reading of 85 was 1 point less than in January and 13 points less than its most recent peak in December. Weak crop prices continue to weigh on financial expectations as mid-February Eastern Corn Belt cash prices for corn and soybeans were 7 percent and 8 percent lower, respectively, than two months earlier when the December survey was conducted. The February Ag Economy Barometer survey was conducted Feb. 12-16.

When asked about their biggest concerns for their farm operations in the upcoming year, producers in this month’s survey chose as their most important concerns inflated input costs – 34 percent of respondents – and reduced crop and livestock prices – 28 percent of respondents. Interest-rate worries among agricultural producers might have peaked because just 18 percent of February respondents cited increasing interest rates as an important concern, a decrease from 26 percent as recently as this past November.

The Farm Capital Investment Index remained weak in February, declining 1 point to a reading of 34 – 9 points less than a year earlier. Responses from producers who said now is a bad time to make large investments reflected their concerns about inflated production costs and weak output prices. The percentage of farmers who said it’s a bad time because of uncertainty about farm profitability has tripled since October 2023. This month 22 percent of respondents pointed to farm-profitability concerns compared to just 7 percent who cited that as a key reason this past fall to hold back on investments.